For blocking the Suez Canal, how Egypt scaled back its ambitions

The Suez Canal would have received only 400 of the 950 million dollars claimed last year, after the failure of the "Ever Given".

The story had gone around the world. And for good reason, it was not trivial: in July 2021, a container ship blocked the Suez Canal for a week and it then took three additional days for traffic to resume. Two months after the grounding of the "Ever Given", Egypt had tried to obtain substantial compensation from the owner of the cargo.

It must be said that the economic consequences had been significant. First, the blockage by the 'Ever Given' blocked 400 other ships and more than 30 cubic meters of sand had to be removed for the salvage operation. What to lose millions: the Suez Canal accounts for 12% of global freight transport and the transport of goods through the Suez Canal represents 350 million euros per hour, or more than 8 million euros per day.

The Suez Canal Authority (SCA), which manages the canal, had decided to claim 916 million dollars in compensation from the owner of the ship, before reversing its decision and asking for "only" 500 million dollars. “After the company that owns the ship informed us that the value of the goods transported was 750 million dollars, we lowered the amount of compensation to 550 million, out of respect,” said Admiral Ossama Rabie, boss of the SCA.

Other ongoing negotiations

After this episode, negotiations took place between the SCA, supported by the Egyptian authorities, and the three insurance companies of the different parties operating the container ship, all Japanese and represented by Mitsui Sumitomo Insurance (MSI), supplemented by the UK P&I Club, a British insurance company. A real battle had begun.

However, four months after the blockage, an agreement had finally been reached. According to Africa Intelligence, Egypt indeed "received damages when the container ship was released in July 2021". But we would be far from the sums announced by the SCA. Cairo, specifies the newspaper, preferred to keep secret the amount of the compensations. But the latter would have been largely revised downwards, after tense negotiations with the Japanese shipowner Shoei Kisen, owner of the ship.

In detail, the SCA demanded before the economic court of Ismailia not far from a billion dollars from the shipowner: a third to compensate for the loss of income, a third for the costs incurred to refloat the ship -containers and the last third for "harming the reputation of the work". However, it is ultimately only 400 million dollars that would have been paid to the SCA.

However, other sums could be paid in the future. Africa Intelligence speaks of a sum of up to 2 billion dollars, which would still be in negotiation.